SKE.TO · 2017-04-20 12:00:00

Skeena Announces Preliminary Economic Assessment for Spectrum-GJ Copper-Gold Project

Economic Studies

Skeena Announces Preliminary Economic Assessment

for Spectrum-GJ Copper-Gold Project

Vancouver, BC (April 20, 2017) Skeena Resources Limited (TSX.V: SKE) (“Skeena” or the

“Company”) is pleased to announce the results of a Canadian National Instrument 43-101 Preliminary

Economic Assessment (“ PEA”) and Mineral Resource up date for the Company’s Spectrum -GJ

copper-gold project (“Spectrum-GJ”) located in the Golden Triangle of northwest British Columbia.

The PEA and Mineral Resource update focus on two deposits that are approximately 14 km apart: the

porphyry copper-gold Donnelly Deposit at GJ (“ Donnelly”) and the porphyry gold -copper Spectrum

Central Zone (“Spectrum”). Conventional truck and shovel open pit mining is planned with a staged

approach to production output, starting at 10,000 tonnes per day (“ tpd”) at Donnelly, ramping up to

20,000 tpd in year 6 when Spectrum comes on -line, and reaching 30,000 tpd in year 12. The staged

approach was adopted to limit operational, technical and capital risks that are typical of new mine start-

ups. Using base case parameters, copper would generate approximately two-thirds of project revenue

during the initial five years of production and approximately 58% over the life of the mine.

The overall planned mine life is 25 years with upside potential to increase this beyond 30 years. A

centrally located flotation processing plant and a single life-of-mine tailings storage facility are planned,

with a conventional Carbon-in-Leach (“CIL”) plant added at year 6 for improved gold recovery.

The project has initial capital expenditures of C$216 million and benefits from the presence of existing

infrastructure on or adjacent to the project area, including grid hydro -power, paved Highway No. 37

and an industrial road that extends to within 10 km of the planned processing plant site. The proximity

of the deep-water Port of Stewart, B.C., is a further significant project benefit.

Economic Analysis

Parameter Base Case Upside Case 1 Upside Case 2

Copper price (US$/lb) 2.75 3.00 3.25

Gold (US$/oz) 1,250 1,300 1,350

Silver (US$/oz) 17.75 20.00 22.50

Economic Results (Pre-Tax)

NPV 8% (millions) C$ 546.18 C$ 699.62 C$ 853.86

IRR 26.6% 31.0% 35.3%

Payback (years) 3.81 3.19 2.71

Economic Results (After-Tax)

NPV 8% (millions) C$ 314.09 C$ 412.99 C$ 512.35

IRR 20.6% 23.9% 27.1%

Payback (years) 4.21 3.68 3.26

US$0.75 = C$1.00

NR: 17-05

April 20, 2017

Walter Coles Jr., President and CEO of Skeena commented: “There are few copper dominant projects

in politically stable jurisdictions that have an initial capex of less than US$200 million, combined with

a 25-year mine life and an after-tax, base case IRR of better than 20%. The after-tax net present value

(using an 8% discount rate) for the Spectrum -GJ project vastly exceeds Skeena’s current market

capitalization. Given that Skeena has three other projects, including the Snip mine, it is eviden t that

the Company’s portfolio of assets is significantly undervalued.”

Skeena’s Chairman, Ron Netolitzky, added: “It is important to note that the PEA production statistics

and financial o utcomes can still be optimized. Both conceptual pits appear to have the potential for

significant expansion, as evidenced by the additional resources availabl e to the south of the planned

Spectrum pit and the considerable tonnage available to the immediate north of the Donnelly pit .

However, prior to seeing the project to the Pre -Feasibility stage, we needed to be assured that the

currently defined in-pit resources, the blended metallurgical characteristics of the run-of-mine material

and the proposed production rates from the two deposits would provide an encouraging, stand -alone

project with attractive economics – and we have done so, decisively.”

Project Overview

Planned Life-of-Mine: 25 years

Production

ROM Material

Marginal Grade Material

Total Plant Throughput

191.75 Mt

21.99 Mt

213.74 Mt

Proportion in Indicated Mineral

Resource Category

Spectrum Pit

Donnelly Pit

79%

96%

Average Overall

Pit Slope Angles

Spectrum Pit

Donnelly Pit 45°

Average Strip Ratios Spectrum Pit

Donnelly Pit

0.52

0.86

Average Cut-Off Grades

(ROM production)

Spectrum Pit

Donnelly Pit

0.435 g/t AuEq

0.204% CuEq

Average Grades

(Spectrum Pit ROM material)

Gold

Silver

Copper

0.96 g/t Au

3.24 g/t Ag

0.13% Cu

Average Grades

(Donnelly Pit ROM material)

Gold

Silver

Copper

0.32 g/t Au

1.97 g/t Ag

0.28% Cu

Overall Average Grades

(ROM material)

Gold

Silver

Copper

0.35 g/t Au

2.04 g/t Ag

0.27% Cu

Life of Project, Average

Metallurgical Recoveries

Gold

Silver

Copper

72.3%

57.1%

89.2%

Payable Metal

Gold

Silver

Copper

1.61 Moz

7.54 Moz

998.99 Mlb

The project benefits from several important economic fea tures and possesses compelling upside

potential, namely:

 low average strip ratios of 0.52 at the Spectrum pit and 0.86 at the Donnelly pit, with an average

of less than 0.5 at Donnelly during years 1 through 5;

 a planned project life of 25 years, which could be extended by means of production optimization,

geotechnical analyses and mining trade-off studies;

 good metallurgical recoveries to a clean, bulk Cu -Au-(Ag) concentrate that has no significant

concentrations of deleterious elements;

 substantial defined resources availab le for project expansion, particularly adjacent to the north

side of the Donnelly pit and to the south of the planned Spectrum pit (less than 20% of Spectrum

drill-inferred tonnage is planned for extraction, pending further diamond drilling and mining trade-

off studies); and

 good exploration potential within the property boundaries, as evidenced by numerous, high-grade

polymetallic vein, breccia and stockwork occurrences.

Capital Cost Estimates

Cost Centre (C$ millions) Pre-Production Sustaining Total

General Infrastructure &

Buildings 69.56 34.80 104.36

Tailings Storage Facility 6.72 52.52 59.25

Donnelly Pit 35.13 107.76 142.89

Spectrum Pit - 26.82 26.82

Processing Plant 66.50 103.31 169.81

Capital Indirects 38.13 36.94 75.07

Totals 216.05 362.15 578.20

Note: Capital cost estimates are inclusive of contingencies.

Operating Cost Estimates

Cost Centre

Average Unit Costs (C$ / t mined or milled)

Stage 1

(10,000 tpd)

Stage 2

(20,000 tpd)

Stage 3

(30,000 tpd)

Post-Production

(30,000 tpd)

Spectrum + Donnelly Pits - 8.85 - -

Donnelly Pit 8.28 - 6.51 1.42

Processing Plant 5.57 6.07 5.51 5.51

G&A 4.26 2.69 1.79 1.09

Totals 18.11 17.61 13.81 8.02

Head Office Overhead 0.83 0.30 0.26 0.26

Notes: The Post-Production stage is when 21.99 Mt of marginal grade material from the Donnelly pit is processed

at a rate of 30,000 tpd. Reclamation and closure costs (reporting to G&A) include a 25% contingency .

Metallurgical Studies

The PEA process design and metallurgical forecast are based on a metallurgical testwork program

conducted in late 2016 and Q1, 2017, by Blue Coast Metallurgy Ltd. of Parksville, B.C., supported by

test work and mineralogical studies at AuTec Innovative Extractive Solutions of Vancouver, B.C.

Bond Ball Mill Work Index tests indicate an average Work Index for the Spectrum composites of 18.4

kWh/t and 19.8 kWh/ t for the Donnelly composites. The results reflect moderately hard material that

is quite close to the median hardness levels for the B.C. copper-gold industry.

A series of conventional gravity, flotation and cyanidation tests were completed. The results show that

the optimum grind size is P 80 120 microns and that a commercially viable bulk copper -gold-silver

concentrate could be produced, alo ng with gold-silver rich doré. Consideration of project economics

resulted in the deferment of the CIL plant and doré recovery circuit to year 6.

Owing to its far greater tonnage contribution to the plant feed mix, metallu rgy is ma inly dictated by

material from Donnelly. Consequently, to align with the PEA mine production schedule, metallurgical

performance was projected for plant feed comprising 100% Donnelly material during Stages 1 and 3,

and for co-mingled plant feed co ntaining 75% Donnelly material and 25% Spectrum material during

Stage 2. The following table summarizes the metallurgical forecast by production stage. The overall

average, life-of-project metallurgical recovery rates are 72.3% Au, 57.1% Ag and 89.2% Cu.

Metallurgical Forecast

Production Flotation Recovery Gravity Conc. Doré Recovery

Stage Rate

(tpd)

Donnelly

Feed

Conc.

Grade

(%)

1 10,000 100% 22% Cu 55 49 90 10 - - - - -

2 20,000 75% av. 22% Cu 49 54 86 - - - 24 7 0

3 30,000 100% 22% Cu 55 49 90 - - - 18 8 0

Mineral Processing

The as-designed process flow is essentially the same as many copper-gold circuits currently operating

in B.C. The following figure summarizes the Stage 3 process flow. The main product will be a bulk

copper concentrate, highly enriched with gold and silver, that PEA planning assumes will be shipped

to smelters located in the Far East. Doré will be produced from year 6, prior to which a gravity gold

concentrate will be produced and sold. Tailings will be disposed of in an adjacent, life-of-mine tailings

storage facility with an estimated maximum capacity of 375 Mt ± 35 Mt.

Two small departures from common convention are included in the process flow. The first is driven by

the need to design a processing facility capable of milling at three different throughput rates, defined

as Stages 1 through 3. This has led to the use of the larger ball mill to act as a primary mill during

Stage 1 (10,000 tpd), receiving fee d from two stages of crushing. While currently unusual, such a

circuit was widely used in the mining industry throughout most of the last century.

The second departure is the use of CIL processing of pyrite -rich products arising from the flotation

circuit, which are amenable to leaching. The CIL process involves: tailings from the copper rougher

float being subjected to bulk sulphide flotation; and the bulk sulphide concentrate being combined with

the copper cleaner tails, thickened and leached by CIL to recover gold and silver. The carbon is treated

at site to extract the gold (and minor silver), which is smelted and sold as doré.

Updated Mineral Resource Estimates

The Donnelly and Spectrum deposits are alkalic porphyry copper -gold deposits associated with Late

Triassic to Early Jurassic diorite and monzonite intrusives, with characteristics similar to those of

producing B.C. mines, including Red Chris and New Afton. The Spectrum deposit includes an overprint

of porphyry-related, higher-grade, gold-vein style mineralization.

The updated Mineral Resource estimates were prepared in accordance with the Canadian Institute of

Mining, Metallurgy and Petroleum standards on Mineral Resources and Mineral Reserves (2014). The

estimate for Spectrum is based on 164 diamond drill holes (of which 88 were complete d by Skeena)

totalling 34,598 metres and 22,581 assay intervals. The e stimate for Donnelly is based on 176

Grinding & in-circuit

gravity recovery

Copper/gold

rougher flotation

Desulphurisation

flotation

Regrind and cleaner

flotationPolishing table

Copper concentrate

Cyanide leach,

CIL & gold/silver

recovery

Gold and silver doré

To PAG tails

impoundment

To NAG tails

impoundment

Donnelly pit

Crushing and

stockpiling

Spectrum pit

concentrate

tails tails tails

tails

tailstails

diamond drill holes (of which eight were complete d by Skeena) totalling 48,325 metres and 16,410

assay intervals.

The majority of the historical drill core for both deposits is still available at site. A significant portion of

the Spectrum material was re-logged and re-sampled by Skeena staff, as part of Company’s on-going

Quality Assurance/Quality Control (“QA/QC”) program of check assaying. All the available, historical

Donnelly core was previously re-logged (and partially re-sampled) by Teck.

The Mineral Resource estimates will be detailed in a NI 43-101 Technical Report on the Spectrum-GJ

Preliminary Economic Assessment, with an effective date of March 30, 2017, to be filed on SEDAR

within 45 days of this news release.

Category Million

Tonnes

Average Grades Metal Content

Au (g/t) Ag (g/t) Cu (%) Au (Moz) Ag (Moz) Cu (Mlb)

Spectrum Central Zone (0.40 g/t AuEq cut-off)

Indicated 31.2 0.94 2.6 0.10 0.94 2.64 67.7

Inferred 29.8 0.47 1.4 0.12 0.45 1.34 76.4

GJ Donnelly Deposit (0.15% CuEq cut-off)

Indicated 215.2 0.31 1.9 0.26 2.14 13.03 1,235.4

Inferred 28.3 0.31 1.8 0.14 0.28 1.64 85.1

Grade Equivalence

AuEq = Au grade + [(Ag grade · (Ag revenue / Au revenue)] + [Cu grade · (Cu revenue / Au revenue)]

CuEq = (Cu grade + [(Au grade · (Au revenue / Cu revenue)] + [Ag grade · (Ag revenue / Cu revenue)]

where:

Au revenue = (1 / 31.1046) · Au plant recovery · Au smelter recovery · Au refinery recovery · unit Au price

Ag revenue = (1 / 31.1046) · Ag plant recovery · Ag smelter recovery · Ag refinery recovery · unit Ag price

Cu revenue = 2,204.62 · 0.01 · Cu plant recovery · Cu smelter recovery · Cu refinery recovery · unit Cu price

 Raw drill hole assays were composited to 4 m lengths broken at domain boundaries . Capping of high grades

was considered necessary and was completed for each domain on assays prior to compositing.

 Block grades for gold and silver were estimated from the composites using an ordinary kriging interpolation

method into 4 m x 4 m x 4 m blocks for Spectrum, and into 10 m x 10 m x 10 m blocks Donnelly.

 Dry bulk densities are based on 858 specific gravity measurements for Spectrum and 1,777 for Donnelly.

 The Mineral Resource estimate is constrained within optimized pits wit h average slope angl es of 45°. Metal

prices of US$1,250/oz Au, US$2.75/lb Cu and US$17.75/oz Ag were used along with metallurgical recovery

rates of 73% for gold, 90% for copper and 50% for silver and the estimated on-site operating costs.

 Minimum grade cut -offs for the Mine ral Resource estimates were determined using the same metal prices,

metallurgical recovery rates and operating costs as outlined above, as well as smelter terms and applicable

royalties.

This release makes mention of Inferred Mineral Resources. The quantity and grade of reported

Inferred Mineral Resources in this estimation are conceptual in nature and there has been insufficient

exploration to define these Inferred Mineral Resources as Indicated or Measured Mineral Resources.

It is uncertain if further exploration will result in upgrading the Inferred Mineral Resources to either the

Indicated or Measured categories of Mineral Resource. Readers are cautioned that Mineral Resources

which are not Mineral Reserves have not demonstrated economic viability. The estimate of Mineral

Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political,

marketing or other relevant issues.

First Nations Involvement

Spectrum-GJ lies within the asserted traditional territory of the T ahltan Nation. The Company has

committed to work closely with the Tahltan Central Government, with its agencies and with Tahltan

Nation-owned businesses to identify and maximize employment and contracting opportunities arising

from its mineral exploration and p roject development activities. To this end , the Company and the

Tahltan Central Government (the “Parties”) have signed a Communications Agreement that provides

a framework for the sharing of information and for joint participation of the Parties in communications

with Tahltan membership and communities regarding Skeena’s activities in Tahltan Territory (see the

Company news release dated January 24, 2017).

Environmental Design Principles

At this preliminary design stage, significant effort has been expended to integrate environmental

design principles into the project layout and operating concept. This approach aims to limit adverse

impacts to biophysical, economic, pre -existing land use and heritage & cu ltural environments within

the project area. The principles applied within the scope of the PEA include:

 to the exte nt that is possible and practicable, locating infrastructure in one drainage basin (the

only exceptions include portions of the site access road and powerline, a security gate at the

Highway No. 37 turn-off and a take-off sub-station from the Northwest Transmission Powerline);

 viewscape values - to the extent that is practicable and sustainable, infrastructure planning

minimizes the visibility of major infrastructure;

 footprint values - to the extent that is possible, safe and practicable, planning utilized existing

infrastructure within the project area to minimize the project’s footprint;

 wildlife conservation - planning off -pit muck handling systems that are consistent with limiting

potentially adverse wildlife interactions, especially on Klastline Plateau on which Donnelly is

located;

 project consolidation - identifying and utilizing a single, consolidated, life -of-of mine tailings

storage facility, the maximum capacity of which could accommodate additional tailings generated

from expanded Spectrum and Donnelly open pits;

 archaeology & heritage - infrastructure planning includes considerations of identified

archaeological and heritage resources, future project planning includes continued evaluations and

modifications to infrastructure that might reasonably be required; and

 design for closure - to the extent that is practicable, the project has been designed for closure and

to minimize the risk of post-closure active management to ensure environmental protection.

PEA Review

Roscoe Postle Associates Inc. (“RPA”) was engaged by the Company to review the parameters used

in the PEA economic analysis, and to make recommendations based on their review. RPA’s review is

in progress, and will focus on the Mineral Resource block model, mining method, mineral processing

and metallurgical testing, process flowsheet, capital and operating costs and economic analysis.

The reader is referred to the Company’s website at www.skeenaresources.com for prior news releases

documenting the acquisition details of both the Spectrum and GJ projects and for prior Mineral

Resource estimations on both deposits, as well as on SEDAR for the Company’s continuous

disclosure.

The PEA is preliminary in nature, it includes Inferred M ineral R esources that are considered too

speculative geologically to have the economic considerations applied to them that would enable them

to be categorized as Mineral Reserves, and there is no certainty that the PEA will be realized.

Qualified Persons

The following are Qualified Persons, as defined in National Instrument 43 -101 - Standards of

Disclosure for Mineral Projects, for the PEA and Technical Report relating to the Spectrum-GJ Cu-Au

project: Mr. Stephen J. Godden, C.Eng. - Independent Mining Consultant of North Vancouver, B.C.,

Project Manager for the PEA and Principal Author of the Technical Report. Mr. David T. Mehner,

P.Geo. - Independent Geological Consultant of Coldstream, B.C., Geological Setting and

Mineralization, Deposit Types, Exploration and Sample Preparation, Analysis and Security. Mr. Scott

A. Britton, C.Eng. - Principal Consultant and Director of SAB Mining Consultants Ltd, of Hamilton,

United Kingdom, co -responsible, with the Principal Author, for the Mining M ethods, Project

Infrastructure and Economic Analysis with particular focus on mine planning, production schedulin g

and equipment specification. Mr. David G. Thomas, P.Geo. - Geological Consultant and President of

DKT Geosolutions, Inc. of Vancouver, B.C., Data Verification a nd Mineral Resource Estimates. Mr.

Christopher J. Martin, C.Eng. - Principal Metallurgist and President of Blue Coast Metallurgy Ltd. of

Parksville, B.C., Mineral Processing and Metallurgical Testing, Recovery methods (process flow) and

related capital and operating cost estimations. Mr. M. John Brodie, P.Eng. - Principal Consultant and

Director of Brodie Consulting Ltd. of West Vancouver, B.C., Environmental Studies, Permitting and

Social or Community Impact, with particular focus on the waste and tailings disposal, and water

management elements.

The scientific and technical information in this news release has been reviewed and approved by Mr.

Michael S . Cathro, P.Geo., Skeena’s Vice President, Operations and Mr. Ruper t Allan, P.Geol.,

Skeena’s Vice President, Exploration, who are both qualified persons as defined by Canada’s National

Instrument 43-101.

About Skeena

Skeena Resources Limited is a junior Canadian mining exploration company focused on developing

prospective base and precious metal properties in the Golden Triangle region of northwest British

Columbia, Canada. The Company’s primary activities are the evaluation and development of the

Spectrum-GJ copper-gold project as well as exploration on the past-producing Snip gold mine,

acquired from Barrick Gold, and the past -producing Porter Idaho silver mine. Skeena’s management

includes a highly experienced team of mine-finders, including Ron Netolitzky, Chairman of the Board.

On behalf of the Board of Directors of Skeena Resources Limited,

Walt Coles Jr.

President & CEO

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